Things look hopeful for construction laborers working or seeking work in the United States, while employers struggle with profit margins that are lagging behind. The Engineering News-Report recently published an insightful review of today’s construction labor market. Among the many positive statistics for construction laborers were one of the lowest jobless rates in years, and the highest percentage increase in average base wage since 1986. Laborers may take comfort in the following:
- The jobless rate for construction workers dropped to 5.5% in September, the lowest monthly jobless rate since 2011.
- Base wage for construction workers jumped 6.4% on average since mid-2014, the highest percentage increase since 1986.
- Domestic construction spending increased by 13.7% year-over-year in 2015. Residential construction was up 16.4% year-over-year.
- Recent worker-shortage survey reported that 86% of contractors report trouble of filling available positions.
What’s driving these numbers? Commentators cite a straightforward supply and demand calculus, with demand exceeding supply in the construction labor market, by far. An aging workforce, reduced pool of available construction labor owing primarily to layoffs during the recession, and more stringent immigration policies and procedures, are credited as significant factors.
As construction spending continues to rise across the country, many employers have not seen corresponding growth in profit margins. (This article provides a general overview of factors on a project that control a contractor’s profit margin.) As outfits struggle to maintain skilled labor forces, pay increases for laborers could continue to burden the bottom line of many companies, and could make it difficult for some firms to compete.
With labor in short supply, construction projects with particularly aggressive schedules could also be in jeopardy, and overall costs could continue to rise. And, with no easy fix to the labor shortage problem, many analysts expect labor compensation to continue to rise.
Nonetheless, confidence continues to climb, with industry expectations for sales, profit margins and staffing levels higher on average than they were six months ago.